Significant Accounting Policies

a) Accounting Convention:

The financial statements of the Company have been brpared and brsented under the historical cost convention on the accrual basis of accounting in accordance with generally accepted accounting principles in India (GAAP) and comply with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.

b) Use of Estimates:

The brparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Actual results could differ from these estimates. Difference between the actual results and the estimate are recognized in the period in which the results are known / materialized.

c) Investments:

Long term investments are stated at cost, less any provision for diminution other than temporary in nature.

d) Inventory Valuation:

Raw Materials and Stores & spare parts are valued at lower of cost or net realizable value. Cost rebrsents purchase price and other expenditure directly attributable to the acquisition and is determined on First in First Out (FIFO) basis.

Tools are amortised over a period of 36 months of usage at Forging Plant and over a period of 36 months from the month put to use at Gasket Plants.

Finished Goods & Work-in-Progress are valued at lower of cost or net realizable value. Cost for this purpose includes materials, labour and appropriate allocation of overheads. Excise duty on stock lying with Company is added to the cost of finished goods inventory.

e) Fixed Assets

i) Tangible

Fixed Assets are stated at cost of acquisition or construction and include amounts added on revaluation, less accumulated debrciation.

ii) Intangible

Technical know-how fee is recognized as an Intangible Asset in accordance with Accounting Standard -26 "Intangible Assets" less accumulated amortisation.

Major Software Products are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

f) Accounting Policy for Debrciation / Amortisation

Debrciation on tangible fixed assets is provided based on the methods given hereunder

Leasehold Land is amortized over the period of the lease.

Technical know how fee is amortized over the period of agreement but not exceeding ten years starting from the use of technical know how. Expenditure on Major Software Products is written off over a period of 36 months from the month put to use except Forging Division where the Software Products are written off over a period of 60 months from the month put to use.

g) Revenue Recognition:

i) Revenue from Operations includes excise duty and is net of returns and trade discounts. Excise duty relating to sales is adjusted against Revenue from Operations. Excise duty on the increase/decrease in the stock of finished goods is recognized as part of the Other Expenses.

ii) Dividend is accounted for on accrual basis when the right to receive the dividend is established.

iii) Export incentives are accounted on accrual basis.

h) Foreign Currency Transactions:

Transactions in foreign currency are accounted at the exchange rates brvailing at the dates of the transactions. Gains / losses arising out of fluctuation in exchange rates, if any, on settlement are recognized in the Statement of Profit and Loss except in the case of long term monetary items relating to acquisition of fixed assets where such gains / losses are adjusted to the cost of fixed assets.

Foreign currency monetary items are converted at the exchange rate brvailing as at the year end and resultant gain / loss is charged to Statement of Profit and Loss, except in case of long term monetary items rebrsenting liabilities relating to acquisition of fixed assets which are adjusted to the cost of the respective assets. In respect of transactions covered by foreign exchange forward contracts, the difference between the contract rate and the spot rate on the date of the transaction is charged to the Statement of Profit and Loss over the period of the contract.

i) Employee Benefits:

i) Provident Fund is a defined contribution scheme and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due.

ii) Superannuation Fund is a defined contribution scheme and the contributions are charged to the Statement of Profit and Loss of the year when the contributions to the fund are due.

iii) Gratuity liability is a defined benefit obligation and is provided for based on actuarial valuation made at the end of each financial year based on the projected unit credit method.

iv) Long Term compensated absences are provided for based on actuarial valuation made at the end of each financial year based on the projected unit credit method.

v) Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred.

j) Borrowing Costs:

Borrowing Costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets upto the date the assets are ready for its intended use. All other borrowing costs are recognized as an expense in the year in which they are incurred.

k) Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at an amount equal to Present Value of future lease payments and corresponding amount is recognized as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Lease management fees, legal charges and other initial direct costs, if any, are capitalized.

l) Deferred Tax

Deferred tax is recognized, subject to the consideration of prudence on timing differences, rebrsenting the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets in case of unabsorbed debrciation and carry forward losses are recognized if there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

m) Impairment of Assets:

At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized in the Statement of Profit and Loss to the extent the carrying amount exceeds recoverable amount.

n) Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if

a) the Company has a brsent obligation as a result of past event,

b) a probable outflow of resources is expected to settle the obligation and

c) the amount of obligation can be reliably estimated.

Reimbursements expected in respect of expenditure required to settle a provision are recognized only when it is virtually certain that the reimbursements will be received.  Contingent Liability is disclosed in the case of

a) a brsent obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation.

b) A possible obligation, of which the probability of outflow of resources is remote.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date. Contingent Assets are neither recognized nor disclosed.

o) Financial Instruments

The Company uses derivatives and other instruments such as foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments as and when required.

3. Excise Duty

The finished goods at Sohna Plant ( Material Division ), Gurgaon is considered as raw material for the Company because the same is used for manufacturing gaskets at Faridabad and other plants. Accordingly the excise duty liability on excisable goods manufactured at Sohna, but pending removal / clearance from the factory brmises as at 31.03.2015, estimated at Rs.3,35,731 ( Previous year Rs.4,16,918) is not accounted for. If the said liability would have been accounted, it would have resulted in a higher charge of excise duty with corresponding adjustment of liability and a higher inventory by Rs.3,35,731 ( Previous year Rs.4,16,918). However, this would have no effect on the net profit of the Company for the accounting year or on the net current assets as at 31.03.2015.

4. Balance with Central Excise & Other Authorities includes H80 lacs deposited by the company as advance excise duty in view of investigation by the excise department, objecting excise exemption on some of the products sold from Sitarganj Plant. The matter is still to be decided.

5. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act have not been given.

6. Small Industries Development Bank of India ( SIDBI ) has sanctioned a limit of H600 lacs for discounting hundies of Micro, Small and Medium enterprises supplying materials to the company . This facility is secured by way of second pari - passu charge in favour of SIDBI on all the current assets of the Company including stock, raw material, stock in process, finished & semi finished goods, consumable stores, etc. both brsent and future and is further secured by personal guarantee of two directors. The hundies accepted by the Company and outstanding balance as at 31st March, 2015 amounted to Rs. NIL ( Previous Year Rs.2,69,53,396).

8. Segment Reporting

a) Primary Segment :

The Company's operations comprise of only one segments viz , "Auto Components & Parts" .

b) Secondary Segment :

The Company caters to the needs of the Indian as well as foreign market. The risk and returns vary from country to country and export to none of the countries exceeds 10% of the sales turnover of the Company. Hence it is not reportable.

9. Pursuant to enactment of the Companies Act, 2013, during the year ended March 31, 2015, the company has applied useful lives of tangible fixed assets as brscribed in Schedule II of the Companies Act, 2013 except for certain class of assets where different useful life is taken based on independent technical evaluation, taking into account the nature of the asset, the estimated usage of the asset and the operating conditions surrounding the use of the asset etc. Accordingly the debrciation has been provided by debrciating the carrying value of the asset (Net of residual value of 5%) over the revised/remaining life of individual assets.

Had the company continued with the brviously assessed useful lives, charge for debrciation for the year ended 31st March 2015 would have been higher by Rs.94.36 Lacs.

10. The Company is entitled for Minimum Alternate Tax (MAT) Credit amounting to Rs.7,40,25,582 (Previous Year Rs.8,03,30,447) to be adjusted against company's future normal tax liabilities as per provisions of Income Tax Act, 1961. The management of the Company, based on the future projections, is of the opinion that the entire MAT credit will be utilised and therefore, no provisioning has been made.

11. Previous year figures have been regrouped/rearranged wherever considered necessary.